Canada need not fear Venezuela oil post-Chavez – analysts

06 March 2013 19:27[Source: ICIS news]

TORONTO (ICIS)--?xml:namespace>Venezuela is not likely to become a more efficient oil producer following the death of President Hugo Chavez, so the country will not pose a threat to Canada’s oil industry - at least not in the short-term, analysts said on Wednesday.

Canadian oil firms are closely watching developments in Venezuela, which has large reserves of heavy oil similar to Canada's oil sands.

However, analysts said that Venezuela’s new government – likely to be formed by interim president Nicolas Maduro after an election within 30 days - is not likely to change Chavez’s policies but may rather be even more radical.

“The new government – what’s probably going to be the Maduro government – will likely be a continuation of Chavez’s policies,” Michael Fitzpatrick, partner at energy research consultants Kilduff Group, said in a webcast media interview.

And even if Venezuela now decided to turn its oil industry around and allow more foreign investment, it would take years for that to show effect on oil markets and prices, Fitzpatrick said.

“Don’t forget, Chavez took [national oil major] PDVSA from being a widely-respected company to one that’s full of problems today” as political allies took over key management roles, Fitzpatrick added.

Risa Grais-Targow, a Latin America analyst at political consultants Eurasia Group, also said that Maduro was not likely be more moderate than Chavez

“We could see [Maduro] being even more radical, given a situation where there are a lot of domestic political tensions, and where he doesn’t have the political capital of Chavez,” she said.

Other analysts said that should Venezuela eventually open up its oil sector, Canadian oil firms would have new business opportunities, given their experience in heavy oil.